CHINA DATA: Independent refineries feedstock imports fall 4.3% on month in January

The feedstock imports for China's independent refineries fell by 4.3% to 16.38 million mt in January from the 11-month high in December 2021, latest data compiled by S&P Global Platts showed Feb. 10.

Feedstock imports comprise crude, bitumen blend and fuel oil.

Pure crude imports, which are required to utilize crude import quotas, amounted to 15.3 million mt last month, down 6.4% from 16.37 million mt in December 2021.

The robust feedstock demand from the mega refineries continued to be key in sustaining these imports in January. Combined crude imports by Hengli Petrochemical (Dalian) Refinery and Zhejiang Petroleum & Chemical rose 11.2% on the month to 5.18 million mt from 4.66 million mt in December.

Hengli increased imports by 42.1% on the month to 2.08 million mt in January after receiving its new quota for 2022, while ZPC discharged around 3.1 million mt of crudes last month, almost on a par with December levels of 3.2 million mt.

ZPC currently has around 12 to 14 VLCCs arriving with imported crudes on a monthly basis, according to a refinery source. The refinery has been running at around 85% to 90% of its 40 million mt/year capacity since late January, indicating its high demand for feedstock imports.

Shenghong Petrochemical, however, did not received any crude in January or December. "Crude imports will likely resume in the coming months after the startup [of the new refinery]," said a refinery source.

In addition, trial runs at the 16 million mt/year greenfield refinery facility in eastern Jiangsu province will likely take place in March instead of late February, according to the source.

Shandong imports

The combined feedstock imports -- including crudes, bitumen blend and fuel oil -- for Shandong-based independent refineries stood at around 10.8 million mt in January, a drop of about 9.5% from 11.9 million mt in December.

The imports of crudes dropped by about 13% on the month to 9.74 million mt during the same period, as four Shandong-based independent refineries were denied the first batch of crude import quotas for 2022.

As a result, some of them had to import bitumen blend or fuel oil as a supplement feedstock.

In January, about 1.04 million mt of bitumen blend was discharged at Shandong ports, around 119% higher on the month. Only 22,000 mt of fuel oil was imported last month, due mainly to the short supply, according to traders.

Platts collects information covering feedstocks imported by independent refineries in Shandong province, Tianjin, Zhoushan and Dalian, Lianyungang, including 32 crude import quota holders, and other non-quota holders. These 32 refiners have been awarded a combined 99.7 million mt of crude quotas in 2022, accounting for 93% of the total allocations to the independent refining sector in 2022.

February imports to decline

In February, the expected arrivals are likely to fall further considering the curb on throughputs during the Winter Olympics in Beijing, which takes place over Feb. 4-20.

The combined throughputs in January already dropped 3.4% from December to a 22-month low ahead of the emission controls, according to local energy information provider JLC.

"These independent refineries have booked fewer cargoes to arrive in February, and the expected arrivals will slowly pick up from H2 March after the event," said an analyst with JLC.

A few independent refineries shut for maintenance in late January because of the Olympics, and two more are to shut in February, with all of them likely to resume operations in March, the analyst added.

The expected arrivals into Rizhao ports are likely to be stable from those in January, according to a port source, who added that the production of refineries in the region has not been affected by the Winter Olympics.

FEEDSTOCK IMPORTS FOR INDEPENDENT REFINERS

*State-run firms trading for independent refineries

Source: S&P Global Platts